It’s 2020. Why the heck am I doing a digital ad fraud explainer? Well, in years past, the biggest brand advertisers would give their digital budgets to media agencies to spend for them. And they got glowing reports back showing how much quantity was purchased, the awesome prices they got, and perhaps even how “well” the campaigns worked based on quantity metrics.
Now some of these marketers are bringing programmatic media buying in-house, for more transparency and control, and more detailed data they can analyze themselves. Some marketers have not delved into digital ad fraud deeply before because the agency did that for them, or so they thought. Even the ones that have heard of various fraud related terms, may not understand what they mean and how the fraud occurs — hence this digital ad fraud explainer.
According to the Interactive Advertising Bureau, there are four types of digital ads: 1) CPM (cost per thousand) where advertisers pay for every thousand ad impressions, 2) CPC (cost per click) where advertisers pay only when they get a click, 3) CPL (cost per lead) pay for leads, adn 4) CPA (cost per acquisition) pay a flat bounty per completed acquisition or sale, or a percentage revenue share on the sale. The first 2 buckets, CPM and CPC, represent approximately 90% of all digital ad spending. That’s where the fraudsters focus their attention to get the most money; so that’s where we will focus our analysis.
When fraudsters set up fake websites to make money selling ad impressions, they buy bot traffic. As long as the bots do their job, millions of impressions are created and sold on a CPM basis. These display and video ad impressions can be on desktop computers, laptops, or mobile devices. The revenue model remains CPM – paid for every thousand impressions. Search ads, and “performance” display ads, are paid for on a CPC basis – paid when there are clicks. The bot has to cause the ad to load, and then do a second step, click on it, to earn the ad revenue.
So depending on the revenue model of the ads, the bot will do exactly what they need to, to earn the ad revenue – 1) load the ad, or 2) load and click the ad. Bots won’t work harder than they need to. If you can see the revenue model, you can figure out what form of fraud to expect.
What follows are various techniques (bolded terms) used by fraudsters and bot makers to drive more volumes, get higher prices, or better cover their tracks. These are not new forms of fraud because they apply to CPM and CPC ads mentioned above. Note that CTV/OTT fraud also falls under CPM because those impressions are paid for on a cost per thousand basis.
Techniques To Get More Volume…
